Transmission And Distribution Investment On The Rise

The landscape of power in this country is changing at a rapid pace. Forces external to the industry, such as climate change, and those with a more intrinsic link, such as technology and consumer demand, have combined to place great pressure on the nation’s delivery system. Add to that the aging and inadequate state of the system’s infrastructure, and what is left is a pressing need for an upgrade.

Utilities recognize this dilemma and have responded. According to a recent survey released by the Edison Electric Institute (EEI), utilities are investing in transmission and distribution infrastructure at unprecedented levels.

The December 2013 EEI Annual Property & Plant Capital Investment Survey shows the total investment for 2012 reached a record $34.9 billion. The figure represents a notable increase in investment for both transmission and distribution infrastructure, when the two figures are taken separately.

Utilities spent $14.8 billion on transmission infrastructure in 2012, a 23.9 percent increase from the $11.9 billion they spent in 2011. They spent another $20.1 billion on distribution infrastructure, which represents a 4.7 percent increase from the $19.2 billion spent the year before.

The survey attributes the growth in capital spending to a number of factors. The high numbers for transmission spending is largely attributed to the completion of large-capacity transmission projects and interconnection of new sources of generation, like renewable power. Distribution spending is attributed to storm-restoration efforts and the incorporation of various smart grid technologies, like automated meter infrastructure.

The level of investment is even more impressive when taken in a historical context. According to the EEI, the level of transmission investment was 160.5 percent higher in 2012 than it was in 2000. Over this 12-year period, the industry made a cumulative investment of $113.3 billion in transmission. The industry has also invested $275 billion in the nation’s distribution system over that same period of time.

The trend is expected to continue, with some slight declines after 2013, although still higher than in previous decades.